Arguably, the most favorite stock for option traders is going to announce 4th Qtr earning results on Jan 31, 2007. This stock market darling has never (except once) missed the earning in the past.

SYMBOL
 PERIOD
 EPS ESTIMATE
 EPS ACTUAL
 PREV. YEAR ACTUAL
 DATE/TIME (ET)
GOOG   Q4 2006 $ 2.90  n/a  $ 1.54  31-Jan-07
GOOG   Q3 2006 $ 2.42  $ 2.62  $ 1.51  19-Oct-06 AMC
GOOG   Q2 2006 $ 2.22  $ 2.49  $ 1.36  20-Jul-06
GOOG   Q1 2006 $ 1.97  $ 2.29  $ 1.29  20-Apr-06
GOOG   Q4 2005 $ 1.76  $ 1.54  $ 0.92  31-Jan-06
GOOG   Q3 2005 $ 1.36  $ 1.51  $ 0.70  20-Oct-05
GOOG   Q2 2005 $ 1.21  $ 1.36  $ 0.58  21-Jul-05
GOOG   Q1 2005 $ 0.92  $ 1.29  $ 0.53  21-Apr-05
GOOG   Q4 2004 $ 0.77  $ 0.92  n/a  1-Feb-05 AMC
GOOG   Q3 2004 $ 0.56  $ 0.70  n/a  21-Oct-04 AMC

Source: Above data is from http://www.earnings.com/ (an essential tool in OptionPundit’s toolbox).

Below is a snapshot from Reuters on what Wall Street is expecting from GOOG. If you observe from the below trends, you will notice that there are mixed signals. While revenues are rising across different time span, earnings are not. Earning estimates are trending up for both this qtr and next year, but declining for next qtr.
 

Consensus Estimates Trend

In U.S. Dollars
 Current
 1 Week Ago
 1 Month Ago
 2 Months Ago
 1 Year Ago
Revenue (in Millions)
Q4: 12/2006 3,135.10 3,122.83 3,122.73 3,121.07 2,819.46
Q1: 03/2007 3,510.41 3,510.76 3,509.43 3,501.09 3,199.03
FY: 2006 10,534.37 10,522.52 10,522.44 10,519.40 9,483.51
FY: 2007 15,231.49 15,194.50 15,169.00 15,176.62 12,898.47
 
EPS
Q4: 12/2006 2.90 2.89 2.89 2.87 2.52
Q1: 03/2007 3.23 3.24 3.25 3.24 2.83
FY: 2006 10.32 10.31 10.33 10.31 8.76
FY: 2007 13.90 13.87 13.86 13.79 11.97

How to make money from this announcement based on mixed signals? Well, Let’s start our jorney of exploring GOOG.

I would very much appreciate your comments, feedback and perspective. Keep pouring in ideas !!

Here is Part-2

Profitable trading,
OptionPundit

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